Roland Jackson London
Top British companies face a wave of investor activism as shareholders rebel over boardroom pay, amid state moves to clamp down on corporate greed and underperformance in the poor economic climate.
Insurer Aviva became the latest victim on Thursday, when the majority of its shareholders rejected annual executive pay awards, delivering a major snub to chief executive Andrew Moss at the group’s annual meeting.
Aviva revealed that 54 percent of its shareholders voted against the insurer’s remuneration report. Including abstentions, almost 59 percent of investors failed to endorse it.
The defeat came despite Moss waiving a pay rise that would have taken his annual salary to more than £1 million (R12.6m).
Aviva chairman Lord Colin Sharman apologised to investors for ignoring their views when setting pay.
Aviva’s rejection vote was non-binding but is nevertheless a major embarrassment.
And the remuneration report would have been thrown out completely had new measures to give shareholders binding votes been brought into effect.
The insurer’s share price, which has been hit by its exposure to debt-plagued euro zone economies, is almost 30 percent lower than a year ago.
Meanwhile, on Thursday newspaper publisher Trinity Mirror announced that boss Sly Bailey would step down, amid a looming shareholder revolt over her pay package.
Anglo-Swiss mining company Xstrata also received relatively low approval ratings for its executive remuneration report.
That news came after AstraZeneca chief executive David Brennan announced his retirement the previous week, amid investor concern over his stewardship of the drug maker.
At Barclays, meanwhile, almost a third of shareholders chose not to back its executive pay awards late last month amid controversy over chief executive Bob Diamond’s hefty wage package.
Barclays said that 32 percent of shareholders had either voted against or withheld support for the bank’s 2011 remuneration report.
Investor advisory group Pensions Investment Research Consultants has repeatedly called on shareholders to vote against “excessive” pay.
Simon Bittlestone, the commercial director at business consultancy Metapraxis, said shareholders were becoming increasingly vocal.
“The challenge for shareholders in a volatile market is to distinguish between those management teams who are doing a good job in tough conditions and those who are not,” Bittlestone said.
At the start of the year, the British government unveiled proposals that would give shareholders binding votes over executive pay, encourage greater transparency, and create more diverse boards and remuneration committees.
The proposals remain under consultation. – Sapa-AFP